The UK buy-to-let market “may have turned an important corner” with major lenders launching lower rates for expat mortgages at less than 1% over the Bank of England base rate, says Offshoreonline.  

The expat and international broker adds that this coincides with property portals, Zoopla and Rightmove, saying that the supply of houses put on the market rose by 5.9% in January with asking prices lifting by 0.9% in the same period.   

Bank base rate is currently 3.5% after a series of rises last year as the central bank bids to combat inflation at 10.5%. The Bank’s interest rate was 0.1% in November 2021.   

Previously, Rightmove had noted UK house prices had fallen over the latter part of last year, following former Chancellor Kwasi Kwarteng’s tax-cutting September mini-Budget, which accelerated already rising mortgage rates. Action taken by current Chancellor Jeremy Hunt in October and in the November Autumn Statement calmed markets, although home loans remain elevated.        

Offshoreonline director Guy Stephenson says: “We are now seeing at least one lender offering UK mortgages for expats at a margin of less than 1% over UK base rate.   

“We have not seen such margins in probably ten years, but it is another signal that markets are returning to a new normal, with UK base rate now expected to remain at a much higher level than was the case since the financial crash of 2008/2009.   

“The inevitable result of higher UK base rates is that lenders are having to trim margins to remain competitive.”  

The specialist lender points out that house prices “have remained solid in many parts of the UK, despite steeply rising mortgage rates”, as the supply of homes for sale has been outstripped by demand for property.   

It adds that with the supply side of the market now showing “a significant jump”, according to Zoopla, expat BTL investors should now have a much wider choice.  

The business also says that many smaller building society lenders have returned to the expat market “after they abruptly withdrew in the face of market volatility during the political turmoil seen in September and October”.  

Stephenson adds: “With more lenders returning to the expat mortgage market and those lenders now clearly seeking to price expat BTL mortgages competitively, we are optimistic and feel that 2023 will be a year when expat buyers return to the market.”